Canadian household wealth jumped to a new collective high of $16.92 trillion in the first quarter of 2024, topping the previous record of $16.84 trillion set in 2022. The latest gains are part of a stunning rise that has seen cumulative wealth jump more than 40 per cent over the past four years, driven largely by real estate and financial asset gains, especially through the pandemic period. The effects, however, have not been even across age and income cohorts. To illustrate, consider only that while household wealth on average is now above $1 million, at least 60 per cent of households are nowhere close to that threshold. The Financial Post’s Joe Hood and Denise Paglinawan break down the current state of household wealth in Canada — and the implications for the economy going forward.

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Canadian households are worth more than $1 million on average: How do you stack up? Back to video

1. Canadian households are now worth more than $1 million on average

Being worth a million dollars used to be the exception, but for Canadian households it is now just average — though it isn’t quite as straightforward as it sounds. Data released by Statistics Canada in June showed that in the first quarter of 2024, average household net worth reached $1,009,483, an increase of about 2.5 per cent from a year ago and up nearly 28 per cent from the final quarter of 2019, the last full quarter before the pandemic. While total household wealth may be at a record, it isn’t the first time average wealth has passed the million-dollar threshold. For three quarters during the pandemic, when real estate values ballooned and savings rates soared, average household wealth also topped seven figures. Stock market gains have helped fuel the latest wave of wealth growth, contributing to inequality along the way.

2. Not all age and socio-economic cohorts are participating equally

Overall household wealth may be on the rise, but disparities remain along age and socio-economic lines. Canadian households in the 55-64 age bracket were the wealthiest in the first quarter, with average household net worth of $1,592,996. They were followed by those aged 45-54 at $1,342,851, the 65+ crowd at $1,121,020 and those aged 35-44 at $655,195. Households under age 35 were least wealthy with an average net worth of $336,348. A silver lining for young Canadians, though, is that they have seen their wealth increase the most since before the pandemic, up 42.5 per cent from $236,039.

From a generational perspective, the baby boomers narrowed the gap on generation X, which remains the wealthiest on average. Over the past year, boomer wealth surged by nearly nine per cent to $1,399,950 while gen X increased their wealth by only two per cent to $1,471,767. Millennials actually saw their wealth decline, taking a hit on real estate.

There are significant discrepancies along wealth and income lines as well. The wealthiest 20 per cent of Canadians have a household net worth averaging $3,412,111, while the bottom 20 per cent have a net worth that is slightly negative, on average. The trends are similar, but a little less pronounced, when it comes to income, with only the top two tranches of income earners having average household net worth above the $1,000,000 level.

The share of disposable income between households in the top 40 per cent and the bottom 40 per cent of the income distribution also reached its widest gap since 2008, according to Statistics Canada.

3. Financial assets have taken the lead over real estate

Real estate has been the primary driver of household wealth creation since the pandemic. Going back to the final quarter of 2019, total real estate wealth has grown by 48 per cent to $8.92 trillion. Over the same time frame, financial assets have grown by a less spectacular 25.7 per cent to $10.02 trillion. But in recent quarters, that relationship has flipped.

In the first quarter, financial assets rose by 3.6 per cent quarter-over-quarter to top $10 trillion for the first time, largely a result of a roaring stock market, Bank of Montreal senior economist Sal Guatieri said. That, he noted, is good for wealthier households that hold investments, but not so great for those without the savings to invest. Statistics Canada noted that net worth growth slowed for the least wealthy households as higher real estate values ballooned offset gains in real estate. The wealthiest households, meanwhile, were able to grew their wealth due to larger financial holdings and a slower rise in debt. TD economist Maria Solovieva said the shift to financial asset gains played a big part in widening the wealth gap, as lower income households had been participating in wealth gains through surging real estate.

4. Pressure is growing on the consumer

It’s no secret that consumers, buoyed by the overall growth of household wealth, have been keeping the economy humming. But inflation and higher debt costs due to rising interest rates are threatening to change that. Solovieva noted that the challenge is particularly onerous for low- and middle-income families that rely on their savings to make ends meet, and who are being squeezed by continued inflation on necessities.This will have direct implications on future spending as these families will have fewer liquid resources to tap into, she said. “People are trying to manage their high interest rate risk and high inflationary environment by reducing spending,” she said, leaving wealthier households to pick up the slack. “Spending is still very, very weak in Canada,” Guatieri added, noting that people, on average, have been cutting back not just on discretionary items but also some essentials. He does, however, see the picture brightening due to interest cuts from the Bank of Canada. “We’ll start to see a pickup in consumer spending through next year,” he said. 

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